How much pfn must deposit each semi-annual period

Assignment Help Financial Accounting
Reference no: EM132809957

PFN Inc. has recently determined that its northern strip mining operation will only be profitable for 10 more years, and the company anticipates that it will need $5 million at that time to fill and refresh damaged land. To ensure that sufficient funds are available, PFN has decided to set aside a certain amount of cash twice per year in a sinking fund on which it estimates it can earn an effective annual interest rate of 9%.

REQUIRED:

Problem a) Calculate how much PFN must deposit each semi-annual period if it is to have the $5 million at the end of 10 years. (Assume deposits are made at the end of each semi-annual period.) (Timeline not required.)

Problem b) If, at the end of 5 years, immediately after making its tenth semi-annual deposit, the firm decides to make a lump sum deposit in lieu of further sinking fund payments, how large a lump sum would be required? (Timeline not required.)

Reference no: EM132809957

Questions Cloud

Explain minds of millions of nonunionized americans : Despite the fact that millions of Americans are members of unions, among many segments of the population there is a perception of unions as bastions of corrupti
Record journal entries for the transactions for a private : Record journal entries for the transactions for a private, not-for-profit hospital. Some time later, investments in #4 had cash earnings of $60,000
Briefly discuss the challenges faced by hr professionals : Briefly discuss the challenges faced by HR Professionals in today's Global Management.
Describe element of a company mandate document : Describe each element of a Company Mandate Document and comment on its value to the negotiations process. Include a reference.
How much pfn must deposit each semi-annual period : How much PFN must deposit each semi-annual period if it is to have the $5 million at the end of 10 years. (Assume deposits are made at the end)
What does it mean for a child to be securely attached : What does it mean for a child to be securely attached? Insecurely Attached? Why is it important for caregivers to establish secure relationships
Explain the importance of an organizational code of ethics : Explain the importance of an organizational code of ethics. Would you work for an organization that has no code of ethics in place.
How should the law treat creative works : How should the law treat creative works and inventions that are a part of the employee's job?
Find fix or variable must regress cash flow against : Find fix or variable must regress cash flow against. NPP Saudi Ltd. has the opportunity to invest $100 million in a new 10 years project in Canada.

Reviews

Write a Review

Financial Accounting Questions & Answers

  Find the present value of the interest tax shield of firm

Assume we have two firms (L and U) that are identical expect for capital structure. Firm U is unlevered (holds no debt), and Firm L is levered (holds debt). Assume the EBIT of both firms is $20,000, and both firms are taxed at a 32% rate. Assume Firm..

  What is the dividend yield

You brought back 7,986 Australian dollars from your trip. What many dollars will you get if you convert your Australian dollars to US dollars?

  Compute cash payback period-net present value of investment

Palo Alto Corporation is considering purchasing a new delivery truck. The truck has many advantages over the company’s current truck (not the least of which is that it runs). The new truck would cost $57,040. Compute the cash payback period and net p..

  Give the journal entry to record admission

Give the journal entry to record admission. Dada invest P115,000 and receives a one-fourth interest in the capital and profits of the business

  Prepare journal entries to record the estimated liability

Prepare journal entries to record the estimated liability for product warranties during the month and the clocks replaced under warranty during the month.

  Prepare a august trial balance for pose-for-pics

Prepare a August 31 trial balance for Pose-for-Pics. Aug. 1 Madison Harris, the owner, invested $6,500 cash and $33,500 of photography equipment in the company.

  Calculate the cost of land-building and land improvements

Conan Corporation purchased land and contracted with a developer to construct an office building. Conan Corporation also engaged other contractors for fencing, paving, lighting, and landscaping. calculate the cost of the land, the building, and the l..

  Compute cumulative effect of change in accounting principle

Cullumber Company began operations in 2015 and for simplicity reasons, adopted weighted-average pricing for inventory. In 2017, in accordance with other companies in its industry, Cullumber changed its inventory pricing to FIFO. What is Cullumber’s n..

  Time value of money concept

The following situations involve the application of the time value of money concept. Use the appropriate present or future value table that may be found by clicking on the Present & Future Values button. Janelle Carter deposited $9,830 in the bank on..

  Prepare an income statement by function for the year ended

Prepare a schedule of cost of goods manufactured for the year ended December 31. Prepare an income statement by function for the year ended December 31.

  A how many years are covered in each of the primary

a. how many years are covered in each of the primary comparative financial statements? were all of these statements

  Show the flexible budget and variance analysis

As sales manager, Terry Dewitt was given the following static budget report for selling expenses in the Clothing Department of Garber Company for the month of October.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd